Introduction to Business Professional Historians Assn 11 October 2008 Presented by John Forde Business Tax Information Officer

Going into business Banking and budgeting Keeping records GST Income tax Provisional tax Business expenses

Banking and budgeting Bank accounts Budgeting for: ACC Student loan Income tax GST

Record keeping - Model Cashbook Page 18, 50 – Smart business IR320

GST Do you need to register? Choose your  accounting basis: payment, invoice, hybrid  filing period

Tax Invoices/Receipts Less than $50 Less than $1,000 More than $1,000 Page 47 – Smart business IR320

GST Page 10 – Smart business IR % on sales and service GST on expenses and purchases File on time Online filing

GST return Total sales for period$1,125 GST collected from sales (1/9 th ) $125 Total purchases for period $900 GST paid or claimable (1/9 th ) $100 _______ $125 - $100 = GST to pay $ 25

Business Expenses: Vehicle Page 38 – Smart business IR320

Business Expenses Home Office – Calculation Mortgage interest Rates Insurance Power 179m ² Total floor space 15m² Floor space used 15m² X 100% Total floor space 179m² = 8.38% Page 39 – Smart business IR320

Telephone Travel & Accommodation Insurance Interest ACC Depreciation Other Business Expenses

Income Tax Profit and Loss Account Sales (Gross Income)$30,000 Less Expenses Rent $4,000 Materials$3,000 Advertising$ 500 Interest$ 500 Insurance$2,000 $10,000 Net profit$20,000 Drawings are not deductible expenses

Provisional Tax Example Profit (2009 Income Tax year*) $20,000 Tax on profit at 19.5% $ 3,900 (due 07/02/2010) Residual income tax >$ 2,500 Need to pay provisional tax next tax year * 1 April 2008 – 31 March 2009

Provisional Tax Example Residual Income Tax (2009 tax year) $3,900 Allow for inflation next year (add 5%) $ 195 Provisional tax 2010 $4,095 There will be 3 payments of $1,36528 August January May 2010 Residual Income Tax $3,900Due: 7 February 2010 (2009 tax year)

Provisional Tax GST and Provisional Tax Ratio option Early payment discount Page 33, 27 – Smart business IR320

Tax Rates Individuals Under $38, % $38,001 - $60, % Over $60, % Company 30%

Tax Rates from 1/10/08 Individuals Under $14, % $14,001 - $40,00021% $40,001 - $70, % Over $70, % Company 30%

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Set up an efficient record keeping system Keep all receipts and Tax Invoices Budget for your taxes Work out if you need to register for GST Send IRD returns and payments before they are due If you can’t meet return dates call us Ask for help Key Messages

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